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<h1>Resident entities can hedge exchange risks on overseas investments via forward/option contracts under FEMA 1999.</h1> Resident entities with overseas direct investments are now allowed to hedge exchange risks associated with these investments. Authorized Dealers can enter into forward or option contracts with these entities, ensuring verification of exposure, and contracts must be completed by delivery or rolled over on the due date. If a hedge becomes partially or fully naked due to a decrease in market value, it can continue until its original maturity, with roll-overs permitted up to the market value on the due date. This directive is issued under the Foreign Exchange Management Act, 1999.